Food delivery might seem like an easy way to make extra cash or hold you over between jobs. However, you may be taking on a big insurance risk if you take this type of job without proper preparation.
Personal Insurance Doesn’t Cover Business Activities
You may think your current car insurance policy will cover you while you’re driving. The truth is, it probably excludes business activities. Almost all policies will consider delivery driving as a business activity.
The reason is that business driving carries different risks from personal driving. You’re probably driving more miles with more stop and go than someone doing their usual commuting and running errands. You’re also going into more unfamiliar places and maybe more likely to leave your car running while unattended. In short, the insurance company has a higher chance of having to pay out a claim than on a driver who only uses their car for personal purposes. So, if you want to use your car for business, you need to be grouped in with other business drivers.
What Happens if You Get in an Accident While Delivery Driving?
If you get in an accident while delivery driving, you’ll handle it just like any other accident, you call the police to take a report and then file a claim with your insurance company. Your insurance company will then issue a check to you or the repair shop for your covered claims.
The keyword is covered claims. If your policy excludes delivery driving, your claims won’t be covered, and you’ll have to pay out-of-pocket. Some drivers think they can just say they were running personal errands when they file insurance. This would likely be criminal insurance fraud, and the insurance company has ways of finding out that you’re a delivery driver both during the accident investigation and by using consumer reports from third-party companies.
If you have damage to your car, you’ll need to come up with the money to repair or replace it on your own. Also, if your car is totaled while you have an auto loan, you’d still be responsible for paying the loan. If you caused property damage or injuries to someone else, they will likely sue you and can seek a judgment against your cash, other savings, home, and future income.
How Can Delivery Drivers Get Coverage?
There are three possible ways a delivery driver might be able to get coverage.
Your employer may choose to purchase a hired and non-owned policy or other supplemental coverage. These policies are more to protect the owner than as a service to you. They often cover liability to third parties but not damage to your vehicle or your medical expenses. The coverage may also only be active at specific times such as during a delivery. It might not be active at other times, such as between trips, that your personal insurance might still say is an excluded business activity.
Commercial Rider or Optional Coverage
Many personal policies allow you to add coverage for business activities. These options are specifically designed for gig economy jobs like food delivery and can be a cost-effective way of adding coverage.
Separate Commercial Auto Policy
Finally, you can choose to purchase a separate commercial auto policy. This is like your personal auto insurance but with business coverage.